Justice Dept. clears Dow-DuPont merger on antitrust questions

Dow and DuPont have received antitrust clearance from US Department of Justice for the proposed merger of equals which means the two global chemical companies have cleared another hurdle and allayed the regulators competitive concerns.

The proposed $130 billion merger of DuPont (NYSE: DD) and The Dow Chemical Co.

Both companies are making concessions - agreeing to sell certain parts of their operations - in order to ensure competition remains alive in their respective markets.

The merger was originally announced in December 2015 but was delayed several times while USA and foreign regulators reviewed it.

The department said that the divestiture of these products, which have total combined annual USA sales of over $100 million, would preserve competition in US markets for broadleaf herbicides for winter wheat and insecticides for chewing pests.

Dow will also sell its U.S. acid copolymers and ionomers businesses, which are used to make food packaging and other goods.

The new company will be called DowDuPont and have dual headquarters in Midland, MI and Wilmington, DE. "This drives up costs for farmers' inputs, and it reduces the incentive for the remaining agricultural input giants to compete and innovate through research and development".

Divestments in the proposed agreement are consistent with commitments already made to obtain the European Commission's (EC) regulatory approval.

The companies said Thursday that they still expected the deal to close in August.

Dow and DuPont have already secured clearance in several jurisdictions, including approvals in the US, Europe, Brazil and China. This agreement will allow companies to proceed in their merger.

The three proposals represent a major coming-of-age for the industry, and leave some concerned about the overall impact on farmers' bottom line.

"The combination of Dow and DuPont, coupled with other pending mergers, leaves family farmers with less competition and choice in the seed and agrichemical sectors", NFU president Roger Johnson said in a statement.

Dow and DuPont are planning to split the merged company into three within 18 months of closing, with the first spinoff a materials-science company that will retain the Dow name.

  • Salvatore Jensen